The New tools of Decision Making

Many managers use the decision making method well, few understand clearly what they are dong. Two new developments however make it important that every manager understand the process. In the first place, a whole new battery of tools to help in decision making has become available These are powerful and valuable tools but, they cannot be used unless the manager understands their purpose.

Secondly, the new technology is rapidly shifting the balance between tactical n strategic decisions. Many decisions that have always been tactical, if not routine, are rapidly becoming strategic decisions containing a high degree of futurity a great impact and a large number of qualitative considerations; they are becoming decisions of high order, In other words. And they can only be taken successfully and systematically.

The new tools have been introduced under the rather confusing name of Operations Research. They are neither operations nor research they are the tools of systematic, logical and mathematical analysis and synthesis. Actually it is not even correct to say that the tools are new; they differ very little from the tools used by the medieval symbolical logician, such as St. Bonaventure. The only new things are few mathematical and logical techniques.

It is not sufficient therefore to train people in using the new tools and then handing over management decisions over to them. Management decisions still have to be made by the manager. And they are still decisions based on judgment. But the new tools can help greatly in some phases of decision making.

In any new tool it is important to say first what it cannot do. Operations Research and all its techniques – mathematical analysis, modern symbolical logic, mathematical information theory, the Theory of Games, and mathematical probability and so on – cannot help in defining what the problem is. They cannot determine the right question. They cannot set objectives for the solution. Nor can they set rules. Similarly, the new tools cannot make the decision concerning the best solution; they cannot by themselves make a decision effective. Yet these are the most important phases in decision making.

But the new tools can be of great help in the two middle stages: analyzing the problem and developing alternatives. They can find and bring out the underlying patterns in the behavior of the business and in its environment, including those that have hitherto lain beyond the manager’s field of vision or rage of imagination. They can thus bring out alternative courses of action. They can show which factors are relevant (that is, facts) and which are irrelevant *that is, mere data. They can show the degree of reliability of the available data and what additional data are required to arrive at sound judgment. They can show what resources will be needed in any of the alternatives course of action, ad what contribution from each component or function would be required. They can be used to show the limitations of each available course of action, its risks and distinct probabilities. They can show what impact a given action would have on other areas, components and functions, the relationship between input and output and the location and nature of bottlenecks. They can tie together the work and contribution of each function or components with those of all others and show this total impact on the behavior and results of the entire business.

Theoretically the above may provide some guidance to managers but in practice manager make important decisions based on current data particularly statistical data and their past experience.